US Dollar Index bulls near two-week high above 105.00; US ISM PMI in the spotlight

The US Dollar Index (DXY) receives bids to reestablish its intraday high above 105.00, after losing the most in two weeks the day before. During Friday's Asian session, the dollar index appeared to be following US Treasury rates while rebounding from a two-week low.

In doing so, the DXY appears to applaud the wide possibility of a global downturn as well as market worry ahead of the crucial US ISM Manufacturing PMI for June, which is anticipated to be 55.0 vs the preceding reading of 55.0.

Thursday's decline in the value of the US dollar was precipitated by weaker-than-expected readings of the Federal Reserve's preferred inflation indicator and weaker-than-expected consumer spending. The dollar's prior decline may have been attributable to declining US Treasury rates, as benchmark 10-year bond coupons fell below 3.0 percent before rebounding to 3.01 percent at the close, representing a decline of around 50 basis points (bps) from June's peak.

The S&P 500 Futures continue under pressure for the fifth consecutive trading day, hovering at a one-week low.

Personal Spending fell to a three-month low of 0.2 percent, compared to 0.5 percent predicted and 0.6 percent downwardly revised prior estimates. In addition, the Personal Consumption Expenditure (PCE) Price Index for May revealed a YoY increase of 6.3%.

Importantly, the Fed's favored inflation indicator, the Core PCE Price Index, met estimates of 4.7 percent YoY vs 4.9 percent before.

Having observed the return of US dollar buyers, traders should await the US ISM Manufacturing PMI for June in order to more accurately anticipate market movements. Also essential will be the discussion of inflation and recession.

Technical Evaluation

In the absence of a daily close below the 21-day moving average, which was at $104.00 at the time of publication, the US Dollar Index is projected to continue its climb toward the annual high, which is now near 105.80.